A Couple of Years Ago You Inherited a Substantial Sum

question 1

Essay

A couple of years ago you inherited a substantial sum of money. This morning one of your second cousins approached you about her struggling day spa business that caters to college students. She would like to borrow $20,000 for a state-of-the-art tanning room for her business. She assures you that the business is steadily growing and promises that you will have your money back in six to nine months at the latest. You are concerned about the day spa's ability to generate sufficient resources to repay the loan. What financial ratios can you examine to assess the short-term liquidity of your cousin's day spa? Provide the formula for each ratio.

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Definitions:

US Steel

An American integrated steel producer, founded in 1901 by J.P. Morgan, Andrew Carnegie, and others, becoming the world's first billion-dollar corporation and a symbol of industrial growth.

Railroad Owners

Individuals or companies that own the infrastructure and rolling stock for railway transport, historically significant in the development and economic growth of many countries.

American Railway Union

A short-lived but significant labor union in the United States, founded in 1893 by Eugene V. Debs, that sought to unify all railroad workers, regardless of craft or job function, into one organization.

Pullman Cars

Luxury railway cars that were introduced in the 19th century, offering sleeping accommodations and other amenities, revolutionizing long-distance train travel.